How to invest 50,000 dollars in 2016? When it comes to capital markets, you’re essentially dealing with stocks and bonds. Both imply different degrees of risk. If you want to make a substantial return on your money, invest in stocks. If you want to make a return that is slightly larger than the bank, invest in bonds. As they say: “If you want to eat well, buy stocks, if you want to sleep well, buy bonds”.
I’ll delve into a variety of market instruments from riskless to the most risky, like stock, bond, option, right and warrant investment strategies, explain asset allocation, value and growth investment management styles, and stress diversification as a means of risk reduction. Ultimately you, the investor, must make the decision about what’s right for you. You have to know yourself to invest. You have to know what risk you can afford to take in order to achieve your financial goals. Let’s remember the markets are avenues of possibilities and not guarantees. Despite this forewarning, I strongly believe that stocks will continue to be the most important tools of wealth accumulation.
Proper money management is the basis for reaching financial success. But how to invest $50000? The most effective way to manage money is through smart investments. They enable one to reach life’s goals and dreams faster. Buying a home, establishing a business, educating children and having security for retirement are a few reasons for investing. Investments can also help lower personal taxes. Lack of elementary knowledge and investment terminology, combined with the constant evolution of investment conditions, causes many people to forsake the opportunities of investments, keeping savings in the bank. Take a look at the table below and notice which investments are considered safe and which are more risky.
Due to the fact that in the last decade inflation balanced from 2% to 13%, the income potential is shown as a level of inflation (I) plus the additional return above inflation. As you can see low risk investments are: government and corporate bonds, securities, bonds, uits and preffered-stocks. The moderate risk represent stocks, rights and warrants. Real Estate and Gold are considered capital investments since their prices in most cases stay on the same level. High risk are represented by options and futures – in other words – forex market. High risk investments can even double or triple your 50000 dollars but since they carry highest risk you can lose your money in a blink of an eye. Moderate risk investments like stocks can guarantee even 20% profit, they’re much safer than options or futures but still you can lose some of your money invested. To the aid comes then, so called diversification, which means investing money in various financial instruments. For instance you put 50% of your 50000 into low risk investments, 30% into moderate risk and 20% into high risk ones. This way you do not risk the entire amount in a single financial instrument. Read more about risk in investments here.
Before you decide to invest your 50000 dollars money on any specific one – acquaint with the basics and rules of the investment game. Take into consideration the capital and the degree of risk one assumes, in order to participate in particular investments.